Paper details
Prepare proforma financial statements for the third year considering all information obtained about the
entity (i.e. after reading the MD&A, the most recent annual reports, press releases, etc.). The starting point
for the proforma financial statements is the unadjusted most recent year-end financial statement of the
assigned company. The proforma statements should include the balance sheet, income statement and
statement of retained earnings. Notes to the financial statements are not required. A bonus of 5 marks is
available for completing a realistic pro forma cash flow statement.
Assumptions should be explicitly stated and supported for the following inputs to the proforma statements:
a. Inflation rate
b. Growth rate
c. Interest rate
d. Capital reinvestment rate
e. Dividend payout rate
One expense item should be specified as primarily variable and one expense item should be specified as
primarily fixed.